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Ageing in Europe

Presenting the EC/EPC-AWG


expenditure projections on health care &
the joint healthcare policy analysis for
ensuring long-term fiscal sustainability

OECD workshop
Paris, 5 April 2018

Godwin Mifsud
Chair of the EPC-Ageing Working Group
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Outline of the presentation

1. Spending pressures due to both ageing


and trend increase

2. Policy challenges and reform options


1. Long-term fiscal sustainability
risks posed by population ageing

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The Ageing Reports
 economic & budgetary
long-term projections for
the EU, including public
expenditure on pensions,
health care, long-term
care, education and
unemployment
 published every three
years
 jointly by the European
Commission and the
Economic Policy
Committee 4
and next… the 2018 Ageing Report
 A new set of expenditure
projections for EU 28
Member States
 Publication in May 2018
 Projection horizon
extended to 2070
 Further details on
underlying assumptions
and projection
methodologies available
since November 2017
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The 2015 Ageing Report:
health care expenditure projection
model structure
Sources of AWG macroeconomic
Eurostat Member States
data: assumptions
↓ ↓ ↓

Per capita age-specific Total


Population
Input data: * expenditure profiles * "Unit cost" development = spending on
projections
(unit costs) health care
↑ ↑ ↑
Alternative Scenarios on Scenarios on health
Scenarios on unit costs
scenarios: demography status
Scenarios on income and Scenarios on income and
macro economic macro economic
variables variables

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Demographic drivers of expenditure

9
the latest 2018 update…

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Source: Eurostat 2015-based population projections
Non-demographic drivers of health
care expenditure

Technological
progress

As countries
become richer,
they are likely
to spend more
on health care
and long-term
care Health care is
labour-intensive:
likely to become
relatively more
expensive
(Baumol disease)
over time

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Health Care Scenarios

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Coping with health care spending trends remains a major
challenge (change in pps. of GDP, 2013-60)
10.0
10.0
9.5
Health expenditure in % of GDP

EU 28 9.5

Health expenditure in % of GDP


9.0 EU 28
9.0
8.5
8.5
8.0
8.0
7.5
7.5
7.0
7.0
6.5
2013 2020 2030 2040 2050 2060 6.5
2013 2020 2030 2040 2050 2060
Non-demographic drivers Sector-specific indexation

Labour intensity Income elasticity


AWG reference scenario AWG risk scenario
Cost convergence High-life expectancy

Demographic Constant health


Projecting Long-Term Care
Long-Term Care Scenarios
Coping with long-term care spending trends remains a major
challenge (change in pps. of GDP, 2013-60)

4.5 4.5
4.0 4.0
3.5 EU
3.5
in % of GDP

in % of GDP
3.0
3.0
2.5
2.5
2.0
2.0
1.5
2013 2020 2030 2040 2050 2060
1.5
Cost and coverage convergence scenario Coverage convergence scenario
Cost convergence scenario Shift to formal care scenario
2013 2020 2030 2040 2050 2060
High life expectancy scenario Base case scenario
Demographic scenario Constant disability scenario
AWG reference AWG risk
2. Policy challenges and options

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Addressing health care
as a policy priority

 In October 2016, EC-EPC


published the 'Joint Report on
Health Care and Long-term
Care systems & Fiscal
Sustainability'

 Volume 1 presents policy


challenges and reform options on
how to contain spending
pressures through efficiency
gains

 Volume 2 presents specific


chapters on each Member State's
HC and LTC systems
Policy Challenges & Policy Options

Policy Challenges
Containing costs
on hospital and pharmaceutical care

Investing in primary care and health promotion


and disease prevention

Frequent budget overruns, competing fiscal


3. pressures, changing policy priorities

Improve the quality of information

Decision making split in ministerial silos

Fraud and corruption


Policy Options Policy Options
A: Improving the governance B:Enhancing the
of health care systems sustainability and efficiency of
health care systems
Policy options: Governance

Union action shall respect the responsibilities of the Member States for
the definition of their health policy and for the organization and
delivery of health services and medical care. The responsibilities of the
Member States shall include the management of health services and
medical care and the allocation of the resources assigned to them.

Art. 168 (7) TFEU


Policy options: Governance

A. Improving the governance of health care systems through:

1. strengthening the cooperation between fiscal and health policy


authorities and employing a wide range of budgetary planning tools;
2. adjusting the regulatory framework to support and strengthen
efficiency, transparency and accountability;
3. setting up of information technology and data management
strategies, to support monitoring and governance;
4. assessing health-policy reforms ex-ante and ex-post in a
systematic and formalised manner based on evidence and;
5. using workforce planning tools to actively manage the health
workforce.
Policy options: Efficiency

B. Enhancing the sustainability and efficiency of health care financing


and spending

This includes:
1. improving the financing mix;
2. benefits packages need to be based on cost-effectiveness criteria
and cost-sharing schemes should support the containment of
public spending, while preserving access;
3. moving away from hospital-centric models;
4. strengthening the cost-effective use and the affordability of
medicines.
Council conclusions

 Health systems aim at providing timely access to good quality


care. This contributes to human well-being and economic
prosperity through improving labour market participation and
productivity, and will be crucial for longer working lives in the
context of an ageing society.
 At the same time, high government debt, together with the
budgetary pressures posed by population ageing, including
from health care and long-term care expenditure, calls for
reforms that enhance the fiscal sustainability of health
systems.
Council conclusions (8/11/2016)
"The Council CONSIDERS that achieving the twin aim of
ensuring fiscal sustainability and access to good quality health
care services for all, by improving the efficiency and
effectiveness of health and long-term care systems, is therefore
particularly important.“S
Thank you for your attention!

Publications:
'Ageing Report 2018 – Underlying assumptions and projection
methodologies'
https://ec.europa.eu/info/sites/info/files/economy-finance/ip065_en.pdf

'Ageing Report 2018 – Economic and budgetary projections for the


28 EU Member States (2016-2070) – forthcoming in May 2018

'Joint Report on Health Care and Long-term Care systems & Fiscal
Sustainability'
https://ec.europa.eu/info/publications/economy-finance/joint-report-health-care-and-long-term-care-
systems-fiscal-sustainability-0_en